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General election: is now the time to exchange your holiday money?

We run through the options on getting the best deal on your holiday money

General election: is now the time to exchange your holiday money?

The pound is currently enjoying a six month high, following the announcement of the snap election on June 8. But holidaymakers are facing a dilemma – do you cash in on this upswing now or wait until after the election to see if you can get a better deal?

The pound has climbed from $1.21 in March to $1.29 against the dollar, while the pound has risen against the euro to €1.18. Of course, as the chart below shows, these levels are nowhere near the exchange rates we enjoyed prior to last year’s EU referendum.

We’ll hold our hands up and say right off the bat – we at Which? don’t have a crystal ball – how we wish we did! We cannot say what impact the result of the general election will have on the value of sterling.

And it’s important to note that while sterling has risen since the Prime Minister announced a snap election, the exchange rate you’ll get is also influenced by the performance of other currencies. The growth against the euro, for example, was slightly muted by the ongoing election in France.

But if you don’t want to play guessing games on how political events, UK exporting figures and foreign investor sentiment could affect the price of your summer holiday, we’ve gathered some pointers to help you get the best deal on your holiday exchange rate today.

The general election and your finances

Stagger your currency purchases

If you think the pound could rise further this summer, you could stagger or hedge your payments so you won’t miss out if there is a surge in sterling.

That might involve buying half of your holiday money now to take advantage of the current upswing and half post-election. That way, you can feel partially satisfied that you bagged a half decent-deal if sterling falls; if it rises you can cushion the disappointment of not getting the very best rate.

For example: if you need £1,000 for a June holiday, you could exchange £200 a week for five weeks until then, taking advantage of current rates, rises leading up the election and any post-election sterling bounce.

Finding the best bureau de change

Whichever strategy you decide, you could quickly negate any smart steps you take by picking the wrong place to buy your holiday cash. Leaving your currency purchase to last minute and buying it from a walk-up bureau at an airport will guarantee you the worst deal.

Compare bureaus

There’s a useful online comparison tool called ‘TravelMoneyMax’, which allows you to search for and compare the best exchange rates offered by bureaus local to you. Identify the one that suits you best and discover the purchase options

Order online

You’ll tend to get better rates by ordering your currency online rather than simply walking into a branch or a retailer.

Click and collect

You can save even more by collecting your order in person, rather than getting it delivered. Firms charge around £5 for delivery, which might scupper any plans to stagger your purchases as you’ll be incurring fees each time you make a purchase.

And while some firms offer free delivery if you’re ordering £500 or more, such as the Post Office or Travelex, you’ll need to work out whether you’d be better of paying a delivery fee for a better exchange rate.

Cancellation options

Some foreign exchange companies allow to reserve currency online in advance without having to commit any funds.

Tesco, for example, lets you to order currency seven days in advance, so if there’s a better rate on offer nearer your holiday you can cancel for free (only if you’ve arranged click and collect delivery at the bureau). Check terms to see if there are cancellation fees.

Overseas spending on plastic

Of course, you could eschew cash altogether and take a card abroad with you, withdrawing cash or spending on credit or prepaid cards. These are much cheaper than using your debit card.

Prepaid cards

The idea behind prepaid cards is a simple – load the card with cash, and use it to withdraw money or make purchases when you’re overseas.

There are two types:

The advantage of using a euro or dollar prepaid card is that you can set and keep the exchange rate on offer when you load the card up with cash. That means you could once again stagger your purchase of currency, and take advantage of any rises.

There are a wide range of cards, such as WeSwap, Carlton FX and Ace FX, on the market which offer low or free top-up fees. Several of these cards require you to deposit £100 to £1,000 or pay a monthly fee of £5 to £10.

There are some innovative sterling prepaid cards on the market, offered by the likes of Revolut and Monzo, that charge no fees for overseas spending or ATM withdrawals (although Revolut limits withdrawals to £200 per month). You can see your transactions in real time, and top up through a mobile app.

The downside is that you’ll only get the exchange rate that’s on offer when you spend – so can’t hedge against changes in the pound’s value.

Find out more in our guide to prepaid cards.

Credit cards

There are also a range of credit cards that charge no fees for spending abroad, many of which charge no ATM fees. Firms offering these cards include Which? Recommended Providers Saga and Nationwide, as well as Barclaycard, Halifax, Creation, Santander, and the Post Office.

These can be handy, especially if you need to pre-authorise payments, such as car rental.

However, it’s vital that you pay off the outstanding balance in full each month to avoid paying any interest.

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